Failure Demand – A Starting point for Outcome Driven Collaboration

Quite a while ago I was introduced to the theory of Failure Demand. Failure Demand has been defined by System Thinker John Seddon [1] as “demand caused by a failure to do something or do something right for the customer [2]“. It is probably a Customer Services department of a company that can relate to it the most e.g. through Customers with repeat calls, because their problem has not been solved, despite the promise made. I agree with Tripp Babbitt [3], that failure demand can cause between 25 % en 75 % of Customer services work. In itself this is not strange (it is what you have Customer services for), yet I also think that the majority of failure demand can be prevented. How? I will address this in a second post on this theme, next week.

In this post I would like to focus on the implications of changing the definition of Failure Demand and, by doing so, broadening the scope and application of the principle.

Failure Demand Redefined

Coming from a Customer services background and with extensive personal experience in analyzing root-causes for failure demand (use of terminology in hindsight by the way) I came to think that Failure Demand, as a concept, can have a much broader impact and applicability, if we change the definition to what it really is:

Failure Demand is the consequential act, or non-act, of a Customer when his desired outcomes are not met.

Why is it important to redefine Failure Demand

For me, the importance of redefining Failure Demand lies in the following: I believe it is important that there is some kind of general accepted vocabulary that can be used across industries and disciplines. If we are ever to establish good collaboration between company silo’s it is needed that we all understand what we are talking about. As you might already know I believe collaboration (and its superlative “co-creation”) is at the center of a Customer centric strategy [4]. Such a strategy even requires collaboration to extend outside the company with Customers and partners.

The traditional definition of Failure Demand makes a good case of tackling the consequences of a failure to act or a failure in acting by a company on its own work. I believe  it is a powerful concept from that angle. Taken from the angle of putting in place a Customer centric strategy, like Social CRM [5], designing great Customer (Service) experiences and Innovation, the “traditional” definition falls short.

Implications of Failure Demand for Service (Experience) Design and Innovation

Service (Experience) Design [6] and Innovation [7] should focus around Customer’s needs and desired outcomes.  In essence this is what putting Customer needs at the center of your Business Strategy [8] is about.

I believe it is important for both Service (Experience) Designers and product/service Innovators, as much as it is important for Business Process Engineers, to understand that their insights will be enhanced when starting their approach from an outcome perspective [9] and that they can also learn a great deal from understanding Failure Demand in their own organizations and from their own products and services. Furthermore I believe all functions mentioned in this blog-post should collaborate closely to really address the issue. It stretches far beyond Customer Services and the back offices. Analysis of Failure Demand, even in the “traditional” definition, is probably a very good first step for such a collaborative venture [10] to improve or innovate the Customer experience. At the same time, understanding where your products and/or services fail to do the job that Customers want to get done [11], will help you best understanding where you need to focus your improvement or innovation efforts.

Extending to the above and my proposed definition, Failure Demand can even be regarded as a failure in Customer demand from an economic perspective: lack of (repeat) sales and revenue. All as a consequence of not meeting desired outcomes. From this perspective failure demand enters the world of marketeers and strategic business development too. A perspective well worth a try if your short of demand in current economic times. And who isn’t?

To conclude

Failure Demand, as a concept, provides great insight in the inability of the Customer experience (design) to provide for a Customer’s desired outcome(s). Failure Demand cannot only explain the level of extra work to be done as a consequence of failures by the own organization, it can be a powerful concept that contributes to the field of Service (Experience) Design and Innovation. Failure Demand can well be the starting point for Outcome Driven Collaboration.

I will blog on my approach towards failure demand analysis next week, to further outline that perspective. In the meantime let me know what you think. How could you apply Failure Demand in your work?